Correlation Between BW Offshore and AcadeMedia
Can any of the company-specific risk be diversified away by investing in both BW Offshore and AcadeMedia at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BW Offshore and AcadeMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and AcadeMedia AB, you can compare the effects of market volatilities on BW Offshore and AcadeMedia and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BW Offshore with a short position of AcadeMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and AcadeMedia.
Diversification Opportunities for BW Offshore and AcadeMedia
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 0RKH and AcadeMedia is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and AcadeMedia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AcadeMedia AB and BW Offshore is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BW Offshore are associated (or correlated) with AcadeMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AcadeMedia AB has no effect on the direction of BW Offshore i.e., BW Offshore and AcadeMedia go up and down completely randomly.
Pair Corralation between BW Offshore and AcadeMedia
Assuming the 90 days trading horizon BW Offshore is expected to generate 1.51 times more return on investment than AcadeMedia. However, BW Offshore is 1.51 times more volatile than AcadeMedia AB. It trades about 0.27 of its potential returns per unit of risk. AcadeMedia AB is currently generating about 0.15 per unit of risk. If you would invest 2,745 in BW Offshore on October 10, 2024 and sell it today you would earn a total of 300.00 from holding BW Offshore or generate 10.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW Offshore vs. AcadeMedia AB
Performance |
| Timeline |
| BW Offshore |
| AcadeMedia AB |
BW Offshore and AcadeMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and AcadeMedia
The main advantage of trading using opposite BW Offshore and AcadeMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, AcadeMedia can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AcadeMedia will offset losses from the drop in AcadeMedia's long position.| BW Offshore vs. Oxford Technology 2 | BW Offshore vs. Zoom Video Communications | BW Offshore vs. International Biotechnology Trust | BW Offshore vs. Infrastrutture Wireless Italiane |
| AcadeMedia vs. Ecclesiastical Insurance Office | AcadeMedia vs. Atalaya Mining | AcadeMedia vs. Scandinavian Tobacco Group | AcadeMedia vs. MTI Wireless Edge |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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